Behavioral finance-part I: "Resistance is futile: the assimilation of behavioral finance"

Frankfurter, George Moshe and McGoun, Elton G. (2018) Behavioral finance-part I: "Resistance is futile: the assimilation of behavioral finance". In: Frankfurter, George Moshe and McGoun, Elton G., (eds.) From Individualism to the Individual: Ideology and Inquiry in Financial Economics. Routledge, London, pp. 415-434. ISBN 9781138731646 (Print) 9781351744553 (Online)

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In this paper we compare and contrast modern finance (the de facto dominant paradigm of financial economics) with what is usually called “behavioral finance” and occasionally called “the anomalies literature”. Those faithful to the dominant paradigm have in fact marginalized behavioral finance by making it the “anomalies literature”. But even the supposed proponents of behavioral finance are marginalizing themselves by clinging to the underlying tenets, forms, and methods of the dominant paradigm. They have allowed it to set the terms of the debate and made it the benchmark against which all finance is not only judged, but also labeled “finance”. But finance research itself is subject to the same “mistakes” that behavioral finance attributes to practitioners, and it is these same “mistakes”, perhaps more than the fierce attacks by the supporters of the ruling doctrine, that are preventing behavioral finance from emerging as a new paradigm. In effect, the failure of behavioral finance is proof of its veracity and legitimacy.
Item Type: Book Section / Chapter
Divisions: Faculty of Arts and Social Sciences
Depositing User: George Moshe Frankfurter
Date Deposited: 24 May 2023 14:50
Last Modified: 24 May 2023 14:50

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